06 October 2015
Islamic lenders will find it difficult to compete in Lebanon's banking sector without regulatory amendments to support growth of the Islamic banking industry, the general manager of Al Baraka Bank Lebanon said.
Mutasim Mahmassani told Zawya that the market share of Islamic banking assets in the overall banking industry in Lebanon remains below 1%.
"You cannot compare the competitiveness of Islamic banks with that of conventional banks because the size of the banking sector in Lebanon exceeds USD 160 billion while that of Islamic banking does not exceed USD 1 billion," he said on the sidelines of the Global Islamic Economy Summit in Dubai.
Al Baraka Bank Lebanon, a subsidiary of Al Baraka Banking Group, expects its profits to grow by 7-8% this year to nearly USD 1 million, he added.
Mahmassani said there was a need to amend regulations related to Islamic financing operations and tools, but that any amendments to the law governing Islamic banking in the country would require parliamentary approval. "Amending Islamic banking laws is the least concern of politicians right now," he said.
The official said that lack of awareness of Islamic banking options in Lebanon was also a major obstacle to growth, adding that murabaha is the most popular tool of Islamic finance in Lebanon.
The law on the establishment of Islamic banks in Lebanon, issued in 2004, requires that half of any Islamic bank's assets be invested in Lebanon and stipulates that deposits should have a minimum term of six months. The central bank set the minimum capital requirement for Islamic banks at USD 100 million, which can be reduced to USD 20 million if certain conditions are met.
Al Baraka Bank Lebanon was founded in 1991 and operated under a commercial banking licence until 2004 when it obtained an Islamic banking licence.
© Zawya 2015
Islamic lenders will find it difficult to compete in Lebanon's banking sector without regulatory amendments to support growth of the Islamic banking industry, the general manager of Al Baraka Bank Lebanon said.
Mutasim Mahmassani told Zawya that the market share of Islamic banking assets in the overall banking industry in Lebanon remains below 1%.
"You cannot compare the competitiveness of Islamic banks with that of conventional banks because the size of the banking sector in Lebanon exceeds USD 160 billion while that of Islamic banking does not exceed USD 1 billion," he said on the sidelines of the Global Islamic Economy Summit in Dubai.
Al Baraka Bank Lebanon, a subsidiary of Al Baraka Banking Group, expects its profits to grow by 7-8% this year to nearly USD 1 million, he added.
Mahmassani said there was a need to amend regulations related to Islamic financing operations and tools, but that any amendments to the law governing Islamic banking in the country would require parliamentary approval. "Amending Islamic banking laws is the least concern of politicians right now," he said.
The official said that lack of awareness of Islamic banking options in Lebanon was also a major obstacle to growth, adding that murabaha is the most popular tool of Islamic finance in Lebanon.
The law on the establishment of Islamic banks in Lebanon, issued in 2004, requires that half of any Islamic bank's assets be invested in Lebanon and stipulates that deposits should have a minimum term of six months. The central bank set the minimum capital requirement for Islamic banks at USD 100 million, which can be reduced to USD 20 million if certain conditions are met.
Al Baraka Bank Lebanon was founded in 1991 and operated under a commercial banking licence until 2004 when it obtained an Islamic banking licence.
© Zawya 2015
